Lloyds Bank Business Barometer - Confidence dips after strong start to the year

02 March 2015

The Lloyds Bank Business Confidence Barometer ‘monthly snapshot’ for February 2015 shows:

 Overall business confidence declines after strong start to the year

  • Significant falls were in the industrial sector including manufacturing and in the North while the South and consumer services saw increases in overall business confidence.

Overall business confidence fell seven points to a four-month low of 45 per cent in February, following a strong start to the year according to the latest Lloyds Bank Business Confidence Barometer. Despite the fall, business sentiment does remain consistent with continued economic growth, but at a weaker pace than signalled in January’s survey.

The decline reflects a fall in companies’ own trading prospects and economic optimism and is the weakest since October when volatility in the financial markets increased sharply. The recent decline may be related to recent uncertainty surrounding Greece’s negotiations with its creditors as well as the pound’s strength against the euro, making it harder to export.

Following stronger sentiment at the start of 2015, the overall balance of firms that were positive about their own future prospects against those that were negative decreased by six points to 48 per cent. This was reflected by a six point increase in the share of firms that were negative about their trading prospects to 12 per cent, while the proportion of positive responses stayed the same.

The overall balance of companies who were positive about the economy fell by seven points to 42 per cent. The share of companies citing greater confidence decreased by seven points to 55 per cent, while the proportion of companies who were negative about the economy stayed the same at 13 per cent.


Further analysis reveals that the industrial sector, which includes manufacturing, recorded a significant drop in overall confidence from 52 per cent to 23 per cent which was the weakest level since October 2012. There was a smaller decline of six points to a six-month low of 50 per cent in the business services sector, although it remains above its long-term average.

Consumer services registered an improvement of 11 points to 56 per cent, possibly helped by the gradual recovery in real earnings growth.


From a broad regional perspective, there was a significant fall of 21 points to an 11-month low of 23 per cent among companies in the North, while the Midlands recorded a smaller decline of 8 points to 40 per cent. Firms in the South, in contrast, recorded a rise of three points to a five month high of 62 per cent.

Trevor Williams, Chief Economist, Lloyds Bank Commercial Banking, said: “Business confidence this month has been affected by the strength of sterling and the negotiations between Greece and its creditors in the eurozone. However, the lower oil price since the summer is helping to maintain confidence above the long-term average.


Notes to editors:

  • The overall “balance” of opinion weighs up the percentage of firms that are positive in outlook against those that are negative.  Responses are re-weighted to reflect the composition of the economy.
  • The industrial sector in this report represents mainly manufacturing and construction; the consumer services sector comprises distribution and transport & communications; business & other services consists of financial & business services and the public sector.

The Business Barometer results provide early signals about UK economic trends and other business surveys such as the PMI survey.

The survey started in January 2002 and research is carried out monthly on behalf of Lloyds Bank by BDRC Continental. This survey was conducted with around 300 companies with turnover above £1 million between 2 and 12 February 2015 from all sectors and regions of Great Britain.